Aetna Trims Lobbying Costs in 2Q - Analyst Blog

In an effort to reshape legislation in its favor, Hartford-based health insurer Aetna Inc. (AET) lobbied the federal government on health care reform and spent $902,452 in advocacy costs during the second quarter of 2011.

Aetna’s lobbying expenses in the reported quarter was down 42% year over year and 17% sequentially.

Aetna has been lobbying hard since the passage of the Health Care Reform. The company was apprehensive of certain provisions related to the health care overhaul, such as prohibiting denial of coverage/claims based on pre-existing conditions,subsidizing insurance premiums, compliance with minimum loss ratio, reduced government spending on Medicare Advantage program,etc.

During the quarter, Aetna lobbied against the minimum medical-loss ratio imposed by the bill, which requires health insurance companies to spend a fixed portion of their premium collections on care and quality improvements. In case a company fails to do so, it would be obliged to refund the amount to its customers.

Besides, Aetna also lobbied for a legislation to withdraw the bill’s directive requiring insurance for all Americans. It even solicited for bills to exclude brokers’ compensation from the calculation of the above mentioned premiums, allow the Department of Health and Human Services to directly negotiate drug prices, as well as allow the establishment of a Medicare Part D prescription drug program and an insurance marketplace on a national scale.

Apart from the Fed, Aetna also lobbied the Centers for Medicare and Medicaid Services as well as the Department of Health and Human Services.

Though the provision of minimum medical ratio maintenance came into effect at the outset of this year, Aetna did not seem to be much affected by this. The company posted strong results in the first half of 2011, with operating earnings of $2.78 per share, partially driven by declining utilization and medical cost trends. Based on these results and the outlook for the remainder of the year, management has recently upped it full-year 2011 operating earnings per share guidance range to $4.60 - $4.70.

Presently, Aetna is eying the opportunities emerging from the Health Care Law, such as the collaborative provider business models and health information technology connectivity solutions as well as investment in these functions to gear itself for a long-term growth. 

Aetna’s rival Cigna Corp. (CI) spent approximately $380,000 during the quarter, down 32% year over year but 36% sequentially, while WellPoint Inc. (WLP) spent $1.3 million, up 17% year over year and down 3% sequentially.

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